Analysts Still See Takeout Potential For Twitter If Management Can't Begin To Execute

Previewing the impending third-quarter results, analyst Youssef Squali said he expects the company to report muted results. The lackluster view is based on anemic new monthly active users statistics and further deceleration in monetization.

Lackluster User Statistics Likely

Specifically, the firm estimates net adds of 3 million for the quarter, representing 3 percent year-over-year growth, consistent with the second quarter levels. The firm's revenue estimate of $604.7 million, representing 6.2 percent year-over-year growth, is in line with the company's guidance and slightly above the consensus estimate. The EBITDA estimate of $157 million is also above the consensus estimate as well as the guidance.

Turnaround Still Work In Progress

Cantor Fitzgerald noted that its intra-quarter checks revealed downside to third quarter user growth, with unique visitors declining both in August and September, although total minutes and average minutes per visitor rose. Based on these statistics, the firm said the turnaround is still a work-in-progress.

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Monetization In Focus

The firm believes monetization deal is a key focus, with estimates for ad growth at 3.8 percent, down from 18.4 percent growth in the second quarter. Reflecting under spending from brand advertisers in recent quarters and some cannibalization of legacy Promoted Tweets, the firm expects ad revenue/MAU, which is otherwise the monetization ratio, up merely 0.9 percent compared to 14.8 percent in the second quarter.

According to the firm, traction with the NFL's TNF live-streaming games is crucial for the success of new content strategy. The firm expects the company's fourth quarter guidance to be in line with the consensus, which calls for EBITD of $192.5 million and revenues of $748.6 million.

As such, Cantor Fitzgerald maintains a Hold rating and a $18 price target on the shares of Twitter.

At last check, shares of Twitter were up 0.17 percent at $18.12.

Full ratings data available on Benzinga Pro.